Talent: Zimbabwe has one of Africa’s strongest education systems, and consequently boasts an abundance of high-caliber talent, which means it is relatively easy for companies to find locals to run their operations. For example, Deloitte expanded its Harare office into a central Africa hub due to the strong talent pool. However, in recent years many high-skilled Zimbabweans have emigrated to neighboring South Africa. Given South Africa’s stagnating economy, skilled and experienced Zimbabweans could return home as the political environment stabilizes and employment opportunities for them expand with an improving economy.
Agriculture: A mainstay of the economy, the agriculture sector will be a major priority given its importance as an export sector that brings in foreign currency. Recently introduced reforms to give agricultural firms better access to finance aim to help farmers buy and import equipment to increase their output – and this could be a boon to global manufacturers. Machinery, seeds and irrigation systems will likely witness a surge in demand.
Looking to the longer-term, Mnangagwa’s administration will look to upgrade areas such as the country’s degraded infrastructure and poorly equipped public health system, which have both suffered due to lack of funds. When this occurs, it will drive considerable opportunities for healthcare and construction firms. However, the government’s immediate priorities are paying down its debts and providing basic services.
But if Zimbabwe’s economy improves, if its operating environment becomes less risky, and trust in the government is reinstalled, investors are likely to re-enter the market given ample opportunities and existing structures that will make it relatively easy to operate there. Plus, Zimbabwe’s geographic proximity to South Africa makes the country fairly accessible.
For companies willing to take on some risks, now is the time to buy local assets, which, though priced in USD, are still fairly cheap because of the associated risk. This is also a good time to look for the best possible potential business partners – they are eager for investment but may not be available for long if interest in the market picks up.
However, companies should stay clear of sectors with high levels of political interference, such as mining. It is not yet clear which direction the new government will take. Manangagwa, even though more pragmatic than Mugabe, has nevertheless worked with Mugabe for years and is operating within a largely similar political system.
Most importantly, executives have to follow developments closely. They have to monitor changes in the market on an ongoing basis and adjust their strategies when developments in the market demand change.
By Anna Rosenberg and William Attwell . This has been reproduced from the Harvard Business Review